Kyrgyzstan has officially authorized the development of a central bank digital currency (CBDC) through new legislation signed by President Sadyr Zhaparov, giving legal tender status to a future “digital som.” The National Bank of the Kyrgyz Republic will have sole authority to issue and regulate the digital currency, along with managing the platform that supports its circulation and operational oversight. While the legal groundwork has been laid, a decision on full-scale implementation is expected by 2026, with testing of the system set to begin later this year. Safeguards, including encryption protocols, will be necessary to prevent misuse and ensure transaction integrity.
Joining over 100 countries exploring CBDCs, Kyrgyzstan has not yet officially launched its state-backed digital currency, unlike countries such as the Bahamas, Nigeria, Zimbabwe, and Jamaica. The strategic push for the development of the digital som follows a cooperation agreement with former Binance CEO Changpeng Zhao, aimed at advising on blockchain regulation and crypto-sector growth. President Zhaparov sees this partnership as a step towards enhancing economic resilience and expanding digital opportunities. Kyrgyzstan’s abundant hydroelectric capacity also makes it appealing for crypto-related infrastructure, with much of this potential still untapped.
While interest in CBDCs grows among governments, they remain controversial among privacy advocates who warn of risks related to surveillance and centralized control. Kyrgyz officials emphasize that any digital currency framework will prioritize financial stability, innovation, and long-term benefits for businesses and citizens. As the country continues to develop its digital currency, it will be essential to balance the advantages of a CBDC with the potential risks associated with centralized control and surveillance.
